Instructions Assume that Gonzalez Company purchased an equipment on January 1, 2014, for $60,000. The equipment had an estimated life of six years and an estimated residual value of $6,000. The company used the straight-line method to depreciate the equipment. On July 1, 2016, the equipment was sold for $40.000 Required: 1. Make the journal entry to record depreciation on the equipment through July 1, 2016. Record the sale of the asset on July 1, 2016. 2. How should the gain or less on the sale of the asset be presented on the income statement? Chart of Accounts X ASSETS REVENUE 111 Cash 411 Sales Revenue 121 Accounts Receivable 491 Gain on Sale of Asset 141 Inventory 152 Prepaid Insurance 154 Supplies 174 Equipment 177 Accumulated Depreciation EXPENSES 500 Cost of Goods Sold 521 Salaries and Wages Expense 532 Utilities Expense LIABILITIES 211 Accounts Payable 231 Salaries and Wages Payable 236 Notes Payable 261 Income Taxes Payable 533 Insurance Expense 534 Rent Expense 537 Supplies Expense 541 Depreciation Expense 551 Advertising Expense 559 Miscellaneous Expenses 810 Interest Expense EQUITY 910 Income Tax Expense 311 Capital Stock 331 Retained Eamings General Journal 1. Make the journal entry with the impact on the financial statements to record depreciation on the equipment through July 1, 2016. Record the sale of the asset on July 1, 2016. General Journal Instructions PAGE 1 GENERAL JOURNAL IMPACT ON FINANCIAL STATEMENTS BALANCE SHEET INCOME STATEMENT DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY REVENUE EXPENSES NET INCOME 2 3 4 5 6 Final Question x 2. How should the gain or loss on the sale of the asset be presented on the income statement? The gain or loss should appear in the of the income statement to indicate that it part of the normal operating activity of the company